UP, Bihar, and Three Other States Account for Half of Centre's Rs 70,000-Crore Interest-Free Capital Expenditure Loans

Centre Allocates ₹32,500 Crore to Five States Under SASCI Scheme

The Centre has allocated around ₹32,500 crore to Uttar Pradesh, Maharashtra, Madhya Pradesh, Bihar, and West Bengal under the 'untied component' of the 50-year interest-free capex loan scheme for states, government sources said. This allocation accounts for about 47 percent of the total outlay of ₹70,000 crore under the untied component.

The Special Assistance to States for Capital Investment (SASCI) scheme was launched in 2020-21 to provide 50-year interest-free loans for state capital spending. The scheme has seen a significant increase in allocation in recent years, with the Budgetary outlay for FY26 pegged at ₹1.5 lakh crore, which was fully utilised. For FY27, the total outlay has been pegged at ₹2 lakh crore.

The loans to states are provided through two channels: untied funds for priority state projects, and tied funds conditional upon specific reforms. The tied component has been used to push states to modernise building codes, digitise land records, scrap old government vehicles, and implement financial management reforms.

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According to this year's allocation in the untied component, UP will receive ₹11,805 crore, while Bihar will receive ₹6,665 crore. Additionally, Madhya Pradesh will receive ₹4,922 crore, West Bengal ₹4,834 crore, and Maharashtra ₹4,315 crore, say sources.

Union territories with a legislature are earmarked ₹3,000 crore under the scheme. An additional ₹5,000 crore is allocated to states and UTs for approved projects under the following categories: construction of malls, police housing, children and adolescent libraries, and digital infrastructure; development of iconic tourist centres at a global scale; and construction of working women hostels.

The balance funds for such projects will be released in a single instalment, subject to the utilisation of at least 75 percent of the funds previously released for these projects. The Department of Expenditure has allocated ₹1.05 lakh crore for the tied component under the scheme for FY27, which will be released subject to specific reforms. These reforms include undertaking construction of roads, rail, and metro; strengthening public finance IT infrastructure; implementing mining reforms; developing digital public infrastructure for agriculture, et cetera.

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